5 reasons buying a tiny house is a mistake

It's a trend that's sweeping home improvement channels: tiny homes. Like, really tiny homes. And while the cute and often-mobile houses may sound practical — it is, after all, a home with running water and plumbing, appliances, and everything you'd need in a place to live — the truth is, for investment purposes, it's wildly impractical. "High-end travel trailers have been around for decades — and that's what tiny homes really are," says Keith Thompson, a real estate broker with Berkshire Hathaway HomeServices Carolinas Realty in Charlotte, NC. "We don't see a significant portion of the population living permanently in them."

Translation? The trend probably won't last long. It also means your return on investment is next to none. Here are five reasons why buying a tiny home may not be in your best interest.

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1. It's a fad

Just like platform sneakers and leisure suits were once popular but are now widely ridiculed, the tiny-home trend is one that may be hot now but is likely to cool off before long. "The key word is fad," says Thompson. "This is a totally unproven market, buoyed by the intense interest in reality TV. Although there can be compelling reasons to want to simplify your life by reducing your financial obligations via less expensive housing options, we don't know long term how that will play out. I'd say the artificial interest caused by the TV trend and the uncertainty in a newer, unproven market make tiny homes a risky investment." You can still live small (even if you don't have a tiny house), however — draw inspiration from that minimal lifestyle and apply it to a home of any size.

RELATED: Take a look at top cities for tiny homes:

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10 cities with the most tiny homes

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10 cities with the most tiny homes

10. (Tie) Dallas, Texas: 14 Tiny Houses for Sale

Not everything is bigger in Texas. In fact, tiny homes are catching on throughout the state. Dallas has the 10th highest number in the nation of tiny homes listed for sale — tied with Irving, Texas, and Nashville, Tenn.

Like in many large cities, housing costs are high in Dallas. The city has experienced one of the steepest surges in rental prices in the nation, according to the Zumper National Rent Report for August 2015. Low-price tiny homes might be offering an alternative to high-rent apartments and high-priced homes.

This suburb has as many tiny homes listed for sale as its bigger neighbor, Dallas. High housing costs could be among the reasons.

According to Zillow, monthly rent in Irving is $1,429 — $132 higher than in Dallas. And the median sale price for homes is $175,598.

Photo credit: GOBankingRates.com/Courtesy of TinyHouseListings.com

10. (Tie) Nashville, Tenn.: 14 Tiny Houses for Sale

Nashville is one the many cities where the tiny house movement is growing. In fact, a micro-home community for the homeless was recently created in Nashville, reports USA Today.

However, there are some restrictions on small homes in the city. Zoning laws allow for accessory dwelling units — small structures built on property with a primary structure — according to MusicCityTinyHouse.com. But houses on wheels can only be in areas that allow RV camping.

Photo credit: GOBankingRates.com/Courtesy of TinyHouseListings.com

9. Aurora, Colo.: 18 Tiny Houses for Sale

Housing costs in this city in the Denver metropolitan area aren't as high as in Aurora's bigger neighbor. But there are several tiny home contractors in the area, which might explain why so many tiny homes are listed for sale in Aurora.

Photo credit: GOBankingRates.com/Courtesy of TinyHouseListings.com

8. San Antonio, Texas: 21 Tiny Houses for Sale

One of the big builders of tiny homes, Tiny Texas Houses, is located about 60 miles from San Antonio — which might explain why the city has many tiny homes listed for sale.

Photo credit: GOBankingRates.com/Courtesy of TinyHouseListings.com

7. Memphis, Tenn.: 24 Tiny Houses for Sale

Small home construction company Tennessee Tiny Homes — and sister company, Tiny Happy Homes — are located just outside Memphis, which might explain the high number of small house listings in the Memphis area. In fact, one of Tennessee Tiny Homes' houses has been featured on the FYI TV series, "Tiny House Nation."

Photo credit: GOBankingRates.com/Courtesy of TinyHouseListings.com

6. Denver: 25 Tiny Houses for Sale

Tiny homes were actually the big attraction at the recent Denver Home Show, a testament to the growing popularity of these small structures in the Mile-High City. "Tiny House Nation" has even filmed episodes in Denver, according to The Denver Post.

However, zoning laws in Denver — like in many other cities — don't favor tiny homes. But, city officials have said recently that they're open to discussing rules regarding tiny houses, reports The Denver Post.

Photo credit: GOBankingRates.com/Courtesy of TinyHouseListings.com

5. San Francisco: 26 Tiny Houses for Sale

It's well known that San Francisco is one of the most expensive cities to live in. The median home sales price is nearly $1 million, according to Zillow. With a lack of affordable housing, there is a demand for inexpensive tiny homes.

However, prospective tiny house homeowners should do their research first; San Francisco's zoning codes make it difficult to have a tiny home legally.

Photo credit: GOBankingRates.com/Courtesy of TinyHouseListings.com

4. Oakland, Calif.: 31 Tiny Houses for Sale

Housing costs also are high in San Francisco's neighbor to the East, Oakland, which recently saw rent prices surge 20 percent, according to the Zumper National Rent Report. As a result, it seems that tiny homes are growing in popularity as an affordable alternative.

But, zoning laws make it difficult to find a place to park or build a tiny home legally, too. Despite the obstacles, tiny house enthusiasts abound in Oakland. The East Bay Tiny House Enthusiasts group has more than 1,000 members.

Photo credit: GOBankingRates.com/Courtesy of TinyHouseListings.com

3. Austin, Texas: 50 Tiny Houses for Sales

Austin residents who are renting might want to consider becoming first-time homeowners — tiny house homeowners, that is. Austin was the second fastest-growing rental market in the U.S., with rental prices jumping 17 percent, according to the Zumper National Rent August 2015 Report. As a result, there's been a push in the city for more affordable housing.

Photo credit: GOBankingRates.com/Courtesy of TinyHouseListings.com

​2. Seattle: 64 Tiny Houses for Sale

The growth in tiny homes might be fueled by the high cost of housing in Seattle, which has the 10th highest median rent for one-bedroom apartments in the nation, according to Zumper, and a median home sale price of $515,561, according to Zillow.

Seattle created a village of tiny homes and opened it in early 2016 for those least able to afford the city's high housing costs: the homeless, reports local news station KIRO 7.

For starters, the median rent is among the top 20 highest in the nation, according to the Zumper National Rent Report. And the median sale price of homes in Portland is $332,600, according to Zillow.

Portland's zoning rules are also friendlier to tiny homes compared to other areas. There also are plenty of resources for tiny home enthusiasts — including lecture series and workshops — and the Build Small, Live Large small house summit was held in Portland in 2015.

2. Buyers are few

If you think the demand for a home that backs up to a major highway is slim, then you'll be amazed at how few people are actually willing to pull the trigger on a tiny home. "Real estate sales are dependent on supply and demand," says Justin Udy, a real estate agent with Century 21 Everest Realty Group in Midvale, UT. "A tiny home is not recommended because it only fits a small demographic of buyers in the market. The more restraints the property offers the market, the more niche it becomes. The more niche the home, the less buyers available for the home." In other words: The supply may be great, but the demand — appropriately — is really, really small. That's not to say if you love it and plan to stay put for the long haul, you shouldn't go for it. Just be prepared, because you might end up facing a really long on-the-market period when it's time to sell.

3. It's less marketable

The vast majority of tiny homes can accommodate one to two residents, which means many buyers who entertain or host overnight guests (many of us fall into this category!), are simply uninterested in even considering a tiny home for their primary home or even vacation residence. "Tiny homes are simply less marketable," says Udy. "The average consumer needs more space, bedrooms, and bathrooms than a tiny home can offer. An average home allows buyers to grow into it and keep it long term. A tiny home offers restraints to changes in the lifestyle of the buyer." A tiny home on a piece of property that offers space for an additional, larger home to be built later could be the exception here, giving the new owner a place to reside while a dream home is under construction (and a cozy place to host guests in the future!).

4. It's too darn small

Sure, the concept of downsizing sounds nice, but let's be honest: Most people have too many personal belongings to squeeze into a tiny home. "While a tiny home may appeal to a recent college grad who was used to living in cramped dormitory accommodations, let's face facts: Most Americans like collecting a lot of 'stuff' and have a tough time finding storage space for all of it in a small, regular house that has a garage and basement," explains Timothy Wiedman, an adjunct professor at Davenport University in Grand Rapids, MI.

Mike Arman, economic development director for Oak Hill, FL, and a mortgage broker adds, "You have just enough room for yourself but no options for expansion, storage, hobbies, nothing. Need to fix your car? You're doing it in the snow or pay retail for someone else to do it. Have a cat or a dog? Where does the cat box go? Dogs don't like being confined. Where do you put your lawn mower? Your rake and shovel? Going to have a baby? Your small house is now too small."

Of course, there are exceptions to every rule, and climate can play a large role. If you live in a sunny, comfortable climate (think homes in Los Angeles, CA, for instance), the ability to open doors and windows, and enjoy outdoor living spaces year-round could make a tiny home feel expansive.

5. It's not less expensive

In essence, downsizing is supposed to help you save money. But that's not necessarily the case with a tiny home. "There is no storage space, so you'll need to rent a storage unit, which means paying for it, and then you have to go back and forth to it every time you need anything larger than a toothpick," says Arman. "Want to have a party? Rent a venue. The list goes on. You can buy a plain old 'non-tiny' house for the same money and get much more utility from it. Finally, most lenders have a minimum square footage they will lend on, so you'll pay cash for your tiny home and so will your potential buyer, which eliminates most of the few remaining prospects you'll have."

Have you lived in a tiny home? Would you do it again? Share your experiences in the comments!